Franchising, retail, business
25/06/2015
The World of Retail, and therefore of the Shopping Center has changed significantly in recent years. For decades, actually, for centuries, retail had not evolved from a simple exchange of goods and services for other goods and services, barter or cash. Perhaps the style of places where this exchange was given, whether they were bazaars
The World of Retail, and therefore of the Shopping Center has changed significantly in recent years. For decades, actually, for centuries, retail had not evolved from a simple exchange of goods and services for other goods and services, barter or cash. Perhaps the style of places where this exchange was given, whether they were bazaars, “souks”, commercial galleries, “magasines” and since the early 1950’s the ubiquitous “malls”
But the arrival of the Internet in the 1990’s and the introduction of e commerce changed the game and today retail looks very different than it did just ten years ago.
In the past “Big Show”, the annual conference organized by the NRF (National Retail Federation) the most talked theme was technology and its impact on retail. At this event, thousands of people were able to explore the future of the “brick & mortar” shops, retailers’ global expansion, mobile commerce, customer experience, and many more topics.
This is crucial moment to make an examination of conscience at the retail industry, because for the first time in history the balance of power has shifted from sellers to the consumer, which is well informed, have mobility, and is connected socially.
Currently, consumers are researching online before going to the store to make a purchase. Up to 20 percent of the year-end sales in 2014 occurred on mobile devices. The dividing line between trade in physical stores and e-commerce is blurring, buyers now use technology to explore, test and perform transactions where and when they please.
This is forcing retailers to become more and more sophisticated in both sales forecast and predicting demand, manage inventory and integrating their channels of physical, virtual and mobile sales. The battle between trade in physical stores and e-commerce has lost all sense, and who continue to advocate and spending million Dollars and Euros in Washington D.C. and Brussels battling Amazon and the like simply have not understood that “The rules are being rewritten in retail” (Mike Webster, Senior Vice President and General Manager of Oracle Retail).
Luckily, many retailers have understood this and have focused on providing customers a unified and smooth experience, regardless of channel. The worlds of online and offline commerce are beginning to converge and retailers have to seize it.
These are some of the technology trends that are allowing retailers to provide this experience:
The Store in 2020.
All these technological changes are already happening and the different technologies are being implemented in physical stores and shopping centers.
It is believed that by 2020 retail physical stores will not only accept, but will encourage Showrooming. “The stores will be like museums where you will go to see something, learn and be entertained,” predicted Thomas Keenan, assistant professor at the University of Calgary and author of a book called Technocreep, which explores the future of technology.
Sensors placed around the shops will communicate information to smart phones, and these will track information about which products the customers stay around, then you can insert information about products and promotions to customers’ mobile devices, It will allow them to buy from their devices and have the merchandise shipped to their homes.
By 2020, retailers will be able to obtain almost the same information from their physical stores customers that they can get from online ones. They will be able to map where people walk and more items that attract the attention of customers with a view to better position certain items in a store. Countless data will be used to understand customers and increase sales.
As more customers will begin to choose applications that allow them to be individually identified, they will receive the benefits of experience and more personalized offers; however, there will still concerns about consumer privacy.
Payments and transactions will be fully transparent; Apple’s foray into mobile payments will mark the era where mobile payments are omnipresent. By 2020, there will be more transactions in place through mobile devices, whether smartphones or handheld technology taking advantage of Near Field Communication Technology (NFC).
Retailers will have greater knowledge of our emotions and how to excite our senses by 2020. Retailers can detect when consumers react positively or negatively to such things as advertising, product display and interaction with sales associates. This will enable retailers to adapt the offers, the smell inside a store or other sensory details, such as the music in real time, based on how customers feel, stimulating the purchasing decision.
Smart Shelves that keep track of inventory, advertise directly to consumers and update prices in real time based on demand, will be present at many stores by 2020. These shelves will notify the store managers when products are out of stock. “The label paper and manual processes of inventory management that is being used today are certainly the more antiquated processes in modern distribution,” said Larry McWilliams, co-CEO of Powershelf. With this system, you can track each item anywhere in the store. In addition, Smart Shelves are ecological, eliminating the need for price stickers, which are replaced often due to price fluctuations.
Technology will increasingly automate routine and mundane work in the stores. By 2020 we will see more and more self-service cash registers in stores. Technology will play a greater role in the automation of the retail experience. Of course, sales staff will not disappear, but many of their routine tasks will be automated, leaving them time to focus on building relationships with customers and increase sales.
E-commerce has certainly revolutionized the way we shop, but physical stores are far from being dead.
What the experts say
We had the opportunity to interview some of the great minds in the retail and shopping center industries, which shared with us their views of how technology is transforming retailing and how shopping malls are adapting to these changes.
This is what they told us:
The Retail Store Is Getting A Digital Overhaul By Lily Varon
Researcher
Forrester Research, Inc.
Cambridge, MA USA
We’re at the beginning of a retail transformation: The growing percentage of retail revenues driven by eCommerce and the influence of digital technologies on consumer behavior and expectations alike means that retailers are being forced to reevaluate the value proposition of the store. The result: A digitally enhanced retail store.
Today, a mix of technologies are coming together to challenge the old paradigm of retail both operationally and from a customer engagement perspective. Some digital store initiatives are already making headway such as mobile point of service and store fulfillment of online orders. However, the list of emerging or edge case technologies available to consider keeps getting longer: proximity technology (e.g. beacons), augmented reality, facial scanning, wearables, 3D printing—the list goes on.
One of the biggest challenges for eBusiness professionals today is to know which technologies have potential and which will remain gimmicks. The truth is that clear success stories – backed by clear evidence of uplift in incremental revenue, are still hard to come by. Despite the rarity of iron-clad business cases for these initiatives, eBusiness professionals and their colleagues in store operations are forging ahead because integrating digital technology into the physical environment will:
Make associates smarter about products and customers. Customers can now find product information in-store via their mobile device without the help of an associate. Retailers can empower the associate with the technology to be the conduit between enterprise data and the customer to drive increased value and engagement.
Personalize the in store experience. Retailers can now know their in store customers’ histories preferences, intention and needs and cater the store experience to them. Retailers should tread carefully, however, balancing the potential benefits with consumer wariness about privacy.
Reclaim and enhance product research. The small screen sizes in most smartphones don’t lend themselves well to research tasks like browsing and navigating between multiple sites at once. By leveraging digital technologies in the store setting to do product research while shopping in-store and enhance the utility and experience at the same time.
The path to digital store success is strewn with obstacles. To this end, eBusiness executives must treat these initiatives like any other that requires significant capital expenditure and work together with their counterparts in other parts of the business to establish a disciplined approach to assessing new technologies. For example, every investment will need to integrate with and leverage existing enterprise systems, primarily the eCommerce platform, POS system, order management system (OMS), campaign management system, and web content management systems (WCMS).
The relevance and impact of emerging technologies on the retail store will vary by vertical and business model. However, only the technologies that improve customer value proposition by breaking down existing friction points or increasing consistency online, offline, and via mobile will stand a chance of surviving the evolution of the retail store.
The Changing Consumer and how will they Impact Shopping Center Development, Leasing and Marketing By Alan McKeon
President & CEO
Alexander Babbage
Atlanta, GA USA
To prosper, shopping centers have to evolve to serve the changing demands of consumers. With fundamental shifts in demographics coupled with dramatic changes in retailer channel strategies, understanding the needs of consumers and retailers is critical to continued success. These changes are occurring in multiple areas, the most impactful of which are explored in this article.
Retail trends: Shopping centers have grown serving the baby-Boomer audience, those individuals who were born immediately after the Second World War. As we have served them through every life stage we now face their changing needs as they age and start to retire. These needs include a change in the desire to acquire more “stuff” and an move towards more experiences – which drives a change in retail mix with implications for more restaurants, personal care, medical and health uses, and entertainment categories.
In parallel, the younger generation, so-called Millennials or Gen-Y are starting to become productive shoppers – but their needs are very different to the generations that have come before them. For this generation, personalization, authenticity and technology are key drivers of their purchases. These two demographic trends (Boomers and Millennials) make it very difficult for a shopping center to successfully serve everyone – today we see increasing specialization with a focus towards one audience or the other.
From a technology viewpoint, retailers have been investing heavily in expanding their digital offerings into the physical world. The drivers of this are straightforward – when consumers shop in stores they spend more money – Alexander Babbage research indicates 43% of consumer spending when shopping in a mall is impulse or unplanned – and the retailer can save the costs of shipping and returns, which on items can exceed 30% of the purchase price. The march towards buying everything online is slowing as the categories that were easy to take online (e.g. Video, games, music, accessories) are already online and the experiential products that require touching, trying-on (e.g. Clothing, shoes) can be experienced in-store with greater sales lift than if the consumer buys online. Retailers are finding that an omni-channel strategy – what she wants, where and when she wants it – is the way to maximize sales. Nordstrom has stated that the shopper who shops Nordstrom through all their channels (web, outlet and full-price), spends 3-4x as much as one who shops through only one channel.
Key technologies to pay attention to are:
PoS evolution – Retailers have spent much of the past couple of years investing in their technology back-office rather than open new stores. This investment is now bearing fruit with a deep integration of the inventory system across the chain. This ensures that less inventory (and less GLA!) is needed at the individual store since it can be ordered and fulfilled from another store or a warehouse if the exact size or color isn’t in-stock. Against this, stores are now being used as delivery points – order online and pickup in-store – which drives shoppers into the center and into the store and may increase demand for GLA or alternative configuration of existing GLA with applications such as click-and-collect.
Wearable technology – the integration of technology into devices (e.g. Apple Watch) or clothing (e.g. Nike Plus, or UnderArmor’s purchase of MapMyFitness.com) is deepening the consumers digital connection. These technologies have been solutions for specific users such as recreational runners but will in time we will see the technology become more robust, washable and integrated more closely into the clothing.
Beacons – this localized, personalized communication technology which allows a retailer or developer to push a message to an opted-in smart-phone is being deployed to provide individual experiences. When as consumer comes within the signaling distance of a Beacon then a message is shown on their phone. This can be context based, so it could be a reminder of a sale, information about new products or a customer service message. One interesting application is to recognize a shopper who has ordered online and is in the store to pickup an item, acknowledge them, then give them a wait time and overall improve the physical shopping experience. While still mostly in pilot phase we expect to see widespread adoption of beacon technology over the next 2-3 years – particularly among shopping center developers who want to build deeper relationships with specific clusters of shoppers or improve their marketing.
These technologies, along with others such as Augmented Reality, Mobile Payments and Shopper Profiling are impacting the retail experience at the same time as consumers are becoming much more aware of the experience being delivered by a shopping center. Since the consumer can now have their needs met from essentially an infinite number of sources – online, big box store, outlet store, department store and specialty stores – the highest value to be created in shopping centers is no longer in basic need fulfillment or selling “more stuff”. The highest value can now be found in the curation and delivery of specialized experiences for a targeted group of shoppers.
These key drivers of technology and demographics requires developers and owners of shopping centers to study and master a whole new discipline, strategic marketing. Those who do so successfully will navigate this challenging time. Those who fail to adapt will find shopper traffic, spend and ultimately rental income under pressure as they strive to retain relevance to the consumer and retailer.
Retail Innovation – Technology behind the Scenes in Real Estate By Joe Rando
Co-Founder, President & Chief Executive Officer
Trade Area Systems
Attleboro, MA, USA
Technology is being used in unique ways to improve aspects of retail not obvious to the consumer. By combining business intelligence (what’s happening in our business) with market intelligence (what’s happening out in the world), retailers can improve their offering to consumers.
This starts with answering “where should we put the store?” Stores that are located to attract the most customers are obviously making the world better for consumers by supplying a more convenient shopping opportunity. If these customers come from the competition, then the retailer has improved their competitive advantage.
Retailers can use technology to optimize locations in many ways. One of the most compelling is to visualize where the demand for their products live along with where their existing customers come from. This allows them to “see” where a new store can provide services to people not currently shopping at their chain.
The benefits of this are that they can focus their search only on areas where there is sufficient demand for their concept that they aren’t already selling to. This saves time and money – less travel and less “Dead-Deal” costs (costs of assessing an opportunity that is eventually rejected.
Another example is allowing real estate professionals to use mobile technology to capture new location opportunities. They can be standing in front of a leasing opportunity and add to their potential locations database right from their tablet or smart phone using the built-in GPS to find the location perfectly. From there they can enter data about the opportunity – size, rent, available parking, etc. and then add photos using the built in camera.
The benefits of this are that the information about new opportunities lives in a central database where anyone that needs to has access. This means there is “one version of the truth” and since it is based on first -hand experience of the site, it is very accurate data.
Yet another example is to give access to sales forecasting models to the real estate professionals. Instead of needing run a new location by the research department, they can run the site through the company’s sales forecasting model to see if it will work well enough to justify doing a store there.
The benefits of this are that it is much more cost effective for the real estate professional to do this on the front lines of decision making than to submit it through a system that requires market research to run the first pass of the sales forecasting model. If the opportunity models well, then the company can invest in market research analyzing it in more detail with a higher probability of an approved site in the end.
Staying Relevant in Today’s Retail By Brian Simpson
Director of Latin America
ShopperTrak
Chicago, IL USA
Despite recent claims, brick-and-mortar shopping is not dying, it is merely evolving. To bridge the gap between the online and offline shopping experience, retailers are leveraging cutting-edge technology to offer shoppers a more advanced, seamless shopping experience rooted in innovation.
Nowadays, retailers in a diverse region such as Latin America are constantly working to connect with shoppers, enhance engagement, and enrich the shopping experience. As such, retailers in Latin America are accelerating their deployment of location-based technologies to gain insights that enhance their critical knowledge of shopper behavior. From these insights, retailers optimize in-store strategies such as staffing and promotions to enrich the in-store shopping experience, better meet customer needs, and improve their financial performance.
The growing focus on analytics in Latin America was exemplified at the Recon LatAm in Cancun 2015, where ShopperTrak – now with an office Mexico City — showcased a robust product suite that provides actionable insights to drive traffic, conversion and transaction size. The analytics provider gained notable interest from both malls and retailers operating across the region.
As retailers strive to offer an omnichannel experience, malls and retailers – including those in Mexico, Brasil, Chile, Argentina, and Colombia – will continue to abandon traditional methods of customer engagement and in favor of new technologies. Through new technologies, such as in-store analytics solutions and mobile tools, retailers will be better positioned to motivate shopper visits, drive sales, and increase loyalty.
Retail trends – e-commerce and the future of shopping centres By Philip M Evans
CEO
TriGranit Management
Budapest, Hungary
The retail industry is at the verge of a fundamental structural change. As shopping centres face the challenge of market saturation and the fast growing threat from e-commerce, industry leaders must embrace change and adapt to the rapidly evolving retail real estate market in order to remain competitive, successful and most importantly, relevant. Shopping centres need to reinvent themselves with new and unique concepts that cater to the needs of new age consumers.
Today’s consumers are quickly adapting to the digital revolution. E-commerce, combined with smartphones and tablet devices, not only offer consumers very competitive prices due to lower operational costs of e-retail, but also provide the largest assortment and quantity of products ever available to them, just a few clicks away, accessible from anywhere.
The impact of e-commerce and m-commerce on traditional bricks & mortar retail is already substantial and continues to grow overwhelmingly quickly every year. If we take the UK as an example, according to the IMRG-Capgemini eRetail Sales Index, internet retailing grew by 14% YoY in 2014 with a record-breaking £104 bn spent online, 37% of which was spent using a mobile device. It is now estimated that e-retail accounts for a staggering 24% of the total retail market in the UK.
As shopping becomes more and more of a leisurely activity and mobile technology fundamentally changes the way that consumers interact with brands and allows consumers to shop while on the move, shopping centres need to embrace new technology as well and incorporate synergic solutions into modernised business models. The trend is similar in the US and quickly spreading to Europe, the Middle East and Asia as well.
The growing importance of leisure pastime, entertainment and edutainment in shopping centres is one of the most promising solutions to the rising threat of e-commerce and market saturation. Shopping centres need to refresh themselves by providing a lifestyle experience. This can be accomplished by reshuffling the tenant mix to increase the non-retail components (new entertainment / edutainment / leisure concepts, F&B, food court, restaurants, coffee shops, bars, and services). The importance of non-retail tenants is evident – it offers a viable solution to competing with e-commerce and proven conversion rates have shown that this leads to higher spending in retail shops. All signs show that non-retail functions, together with the merging of online and offline worlds, will be the backbone of brick and mortar retailing in the future.
5 Opportunities for the Future of Retail Shopping Centers By Michael Greeby
CEO | Dream Amper
work.shop
Chicago, IL USA
Ok, ok, we know the internet is here already. What we are not paying enough attention to is how it has/will 1) eaten our lunch and 2) create opportunity for traditional bricks and mortar retailers. If you accept premise number one, then you will be free to explore, leverage and capitalize on concept number two. Below are five opportunities worth exploring for centers to be a force to be reckoned with in the future.
Have your Center be the Center
IM, chat, hangouts are cool, but they just don’t compare to being together. Actually, together. Owner’s, operators and managers of shopping centers have the opportunity to roll back the clock a little and get retro-cool by being the CENTER (think Rouse’s original vision for Columbia, MD). Municipalities, schools and churches have forfeited this responsibility (right, wrong or otherwise) and there is a huge opportunity for the center, the heart of the community, to be, once again, the shopping center. The internet has a long way to go to crack this code; no one else seems to have the resources or desire. Retail can easily grab the wheel and steer the ship. Create the backdrop for the experiences worth sharing on Snapchat, Instagram and Vine.
Turn your Center into a Playground
The buzz for the last years has been about creating entertainment centers to stay relevant and ahead of the curve. Simply put, if I can get it at home tomorrow, you need to give me a compelling reason to get it somewhere else today. This is why experience is so important. Frankly it is vital for survival. Shopping is fun, other things can be more fun. For some dancing is the answer (me included – TMI). Crossing the street (or more accurately waiting) has never been as much fun.
This idea gets you on so many levels. Keep people safe. Keep them entertained. Slow them down. Allow people to contribute. Make everyone involved feel like a star! Whether it is a billboard, a fountain, a play area, a performance or a show – keep people longer. Let them linger.
Like it or hate it Vegas has this down like no other. The Bellagio’s dancing fountains. The Freemont Experience light show and canopy. The Mirage’s pirate thing – whatever that is. The street performers at the corner of Flamingo Road and Las Vegas Blvd. near Bally’s. All get people not only to slow down, but to queue up and wait.
Play videos on LCD screens on green walls. Have local performers showcase their skills. Create a playground, for both kids AND adults.
Amusement, Elite Status and Membership Clubs
While recently traveling with my family to Orlando, we had the privilege to experience the Wizarding World of Harry Potter at Universal Orlando. All pun intended, it was truly … well .. magical. As Ron Weasley would have said, the “brilliant” thing about this all was that not only did I shell out more than $300/day simply to enter the premises, but dropped just about as much in the retail stores on wands and maps and 9 pound chocolate frogs. Furthermore, there aren’t even that many rides (6 to be exact including the train and Diagon Alley). I essentially paid Universal (and J.K. Rowling) for the privilege to SHOP. The dirty little secret is that I did so willingly! It was amazing. If I could afford it I would go back in a second.
We can learn a lot from the theme parks at Disney, Universal, and others. Amusement can be worth the price of admission. Let’s make our centers worth visiting even if you NEVER step foot in a “shop”. The Landlord’s job is to get shoppers on the premises. This is one amazing opportunity for study.
Realizing that every center can’t (and probably shouldn’t) be an amusement park, make sure that yours is the most envied of its class. If you are a pure convenience center, make sure that the parking is easiest, that the building is clean, that trash is properly put away. Look for opportunities to make it even MORE convenient; add an ATM, have a pick-up and drop-off zone, offer wi-fi in the parking lot or anything else that may make running an errand easier and more enjoyable.
EVERYONE loves to be at the front of the line, on the right side of the velvet rope or receiving perks. Additionally, if their is a strong sense of perceived value for the services, people will even pay for the privilege.
One idea is to follow the highly enviable Costco model – charge a membership subscription. According to the Wall Street Journal, in one quarter of 2014, Costco made $784 million dollars from membership revenue. While this only represents about 5% of their total sales – this is nearly pure profit. Why not create a zone in the center that is for members only and that allows customers to get other perks such as priority and/or free parking, baby sitting, express check-out or other low-cost benefits. In a podcast for NPR’s PlanetMoney program, Gary W. Loveman, chairman, president and CEO of Caesars Entertainment Corp., stated that one of the keys to their Total Rewards program was to deliver perks with high perceived value, but with little or no cost. He stated that he loved velvet ropes, because it is nearly free to create VIP areas and then access.
Try developing a simple loyalty plan for your center (or better yet entire brand) similar to the one developed by the company Belly. You get points for merely showing up! Maybe more points buy doing things (scavenger hunts, participating in events, tweeting about the center). Even more when they buy stuff. By embracing with both hands the mobile and beacon technologies available today, you can easily reward your loyal customers by being the place to be.
The Internet of Things
Wearable technologies are big buzz for 2015. The Apple Watch (no longer iWatch by the way) is set to release on April 24th and will be leading the charge for not only all things wearable, but all things internet. Be prepared for the Jetson’s house to become a near reality and soon. According to Cisco’s Internet Business Solutions Group (IBSG), they predict some 25 billion devices will be connected by 2015, and 50 billion by 2020. This will change everything that we do, the way that we do it and will present unimaginable opportunities to change the ways that we will want to see it, experience it and buy it.
If we change our perspective just a little bit, we can 1) overcome our fear of show rooming and 2) break down the barriers of the traditional retail threshold. The common area can be leveraged as a mutual platform for intentional display and product performance. The shopping center has so many advantages over every other class of real estate and should be the very first space to completely embrace the internet of things. Interactive media boards to check your Facebook and check in on your foursquare accounts. Parking retrieval apps. Interactive vending machines/kiosks that create custom items. The more that we accept that.
Smaller, shorter, partnered, omni-everything
The shopping center by creation was the second great evolution of the omni-channel experience (department stores laying claim to the first place spot). It was the one place where you could get and do a lot of different stuff with a single trip. Facts are facts and most retailers are shrinking their footprints. They are evolving to meet their customers’ needs, but the centers are reacting to these needs rather than looking for new opportunities. Fundamentally this means that centers need to find additional retailers to fill what will be a gap.
A creative new method for investment and financing will be required to take advantage of these opportunities. If not, the cool new restaurants and retailers will choose some other location than your center. We’ll be stuck with test-tube corporate concepts. Shorter term leases coupled with an online presence can be one way to capture new concepts. With a more collaborative and less “collect the rent” mentality, centers can actually expand their traditional store selections by incubating new online only concepts. This seems like sacrilege, but it if we keep relying on others to take all the risk, we will be left with no reward.
Take a look at two of the most talked about brands that have come from clicks to bricks: Warby Parker and Bonobos. Both of the men’s focused retailers proved their concept “on the line” and have become upscale darlings. Bonobos operates out of 900 sf+/- and creates an experience for having custom wearables chosen and measured in store. Your final garment is then delivered to your house in a couple of days. Warby Parker has changed the way we purchase eyeglasses. They have hip traditional frames which are fun and affordable sent to your house to try on for free. Just choose the one you like and tell them your prescription – glasses arrive in a couple of days. The key here is that they tried their new business out WITHOUT paying the 8 – 12% occupancy cost typical of having a location in the mall. When they were ready, they chose to pay for the advantages of a physical locale.
Using this as an example then expand even more deeply with intentional pop-up/short term tenants. Put together a small area of new concepts only (good place for velvet rope access). Call it designer market. Pick out the freshest styles and make everyone else envious. This becomes YOUR minor league farm team for the seasons to come. Get something for the space while you are raising your crop. Not all will work, but the more that Owners and Tenants collaborate, on nearly everything moving forward, the better it will be for everyone.
Retail is changing, just like it always has. Is your center going to be the one that gets outpaced? Be bold and take advantage of the opportunities that all centers have at their disposal to steer your center for lasting success.
Are You Making Mistakes When it Comes to Multicultural Marketing? By Cesar Melgoza
CEO and Founder
Geoscape
Miami, FL USA
Have you ever visited a foreign country and made an accidental “faux pas” when misreading its language, cultural or societal cues? That’s how a business can feel when their multicultural marketing efforts miss the mark – but the impact of these mistakes can be quite severe.
If you’re a retailer that’s looking to better attract the multicultural market, have no fear. There are a number of successful companies doing some very innovative things on the pricing, targeting, segmenting and promotional fronts. Here are some common mistakes to avoid based on those retailing success stories:
Stopping at Language
Perhaps the greatest mistake a business can make is to over-simplify the multicultural population. Of course, it’s important to segment every population – we all know that – but it becomes especially important when it comes to emerging ethnicities.
Consider the Hispanic market, for example. It’s more than just Mexicans or Puerto Ricans. It’s a mix of hundreds of potential attributes, comprised of country of origin, financial status, language preference, shopping behavior, media habits and level of acculturation. Stopping short on segmentation allows brands to distribute inaccurate, and often insensitive, messages that turn-off potential customers.
Not Linking Loyalty Programs
There’s a wide variation in how programs are structured and incentivized. But when it comes to the multicultural market, we’ve found a loyalty program to be a key data collecting tool when working to understand the cultural nuances and buying habits of a multicultural customer base.
One of our large grocery store clients used a loyalty program to provide the bedrock of its multicultural marketing strategy. Through which, they were able to discover the impact of promotional campaigns across their multicultural constituents. The end result was a highly targeted and sophisticated way to match promotions to interested shoppers. Their promotion redemption rate among multicultural consumers was an amazing 66 percent!
Not Reporting Accurately
This may seem obvious, but many in retail often put the cart before the horse. They know that something must be done, but they don’t invest in the infrastructure to monitor the campaign before testing the waters. It’s essential to have the right analytics tools in place before entering the multicultural market.
The economics are abundantly clear: multicultural populations provide any retailer, of any size and shape, their next greatest opportunity for growth. But marketers must understand how sophisticated and diverse these consumers are. In order to avoid common mistakes, they should be approached with the right balance of data analytics and insights, in order to be reached effectively.
Current and Future F&B Retail Influencers By Francis Loughran
Managing Director
Future Food
Docklands, VIC Australia
What are the two most important influencers with regards to F&B Master Planning?
With extensive experience over the past 20 years, I can safely say that the importance of technological connectivity (and innovation) and the utmost need to externalize the F&B statement are the two most critical components of F&B master planning today. The retail centres of the future have to be planned on the foundation of these two principles.
What do you mean by ‘externalizing’ the F&B statement?
A valid deterrent to attracting today’s urban consumer is the lack human scale and ambience with regards to F&B retailing – would you really consider visiting an F&B venue that is located next to closed shop fronts, limited or no street access, within an empty mall? I always challenge my clients to consider that it is essential that the overall physical environment communicate safety, comfort and a social space to meet friends, family and business associates. Dining options are being dictated, in part, by social affiliation. Diners do not want to walk through a shopping centre mall with closed shops and security guards. They will only uptake the space if it offers street or courtyard frontage, close car parks or taxi ranks. This means allow customers to access and interface with the F&B options without the necessity to have to walk through a mall. This will also encourage a strong evening economy. Additionally, exposure – the ability to recognize the food outlet and ease of access to enter the outlet is paramount to the success of creating a dining cluster.
Can you provide some examples of where the F&B statement has been successfully ‘externalised’?
During my visit to Chile, Parque Arauco demonstrated a sharp understanding of customer conventions and lifestyle desires while developing their dining piazza concept. Realizing that patrons were seeking longer trading hours and a more experiential environment, this developer has created a dining cluster – within the mall – that is accessible completely from the street. During the evening, after the mall has closed, customers have no reason to walk through a quiet retail center (with closed shop fronts and cleaning crews) rather can plan to meet, socialize and dine in weather protected environments that are lively, engaging and most importantly customer focused – effectively transforming people into customers.
Xintiandi Shangahi is another interesting development that showcases well considered place making initiatives and principles. Nestled amongst some of the world’s glitziest (and largest) shopping centers, Xintiandi Shanghai has made an effort to comprehend what today’s consumer is seeking – a dining cluster offering options for day parts that are not controlled by shopping center trading hours. Characterized as emphasizing human scale, an alfresco offer, and open all day, 7 days with licensed retailers, this dining strip allows ethnicities and cultures to socialize, congregate, dine and be entertained without feeling alienated – a bottom up approach that has proven successful for more than a decade now!
How important is it for F&B brands to offer connectivity through technology?
As customers become more time poor yet technologically savvy, immediate connectivity with a brand – both physically, and, on a social level, has now become an expectation rather than an aspiration. This ‘connectivity’ begins on a bricks and mortar level. With technology being an enabler rather than a ‘feature’, it is now crucial, more than ever, that brands implement initiatives and design features that not only challenge the status quo of retail design but also accessibility. Retail centers and mixed-use developments are planning for the future, and this requires preempting how consumers will seek to use a space and how their expectations on comfort and convenience need states will be met – both in the immediate and long term future. This is where technology allows for an immediate connection.
How does technology differ for F&B brands over fashion concepts – especially on an master planning level?
Whether it is the fashion industry or F&B, technological interfaces as one of the main points of contact, if not the first, and will ensure almost immediate engagement – something most brands and operators aspire for. This has been the premise of the iPad Ordering Stations for the various F&B operators throughout the Delta Terminal at JFK airport, New York. ‘Integrating ‘food runners’ who deliver the orders to customers via a GPS tracking system ensures customers concerned about leaving their designated gate for fear of missing their flight will still be serviced. Future Food has been implementing GPS based table runners and electromagnetic table identifiers across various projects internationally. It is all about allowing the customer to be in control of his or her own space and participate in their own speed of service.
Will technology influence customer preferences and create an impact in innovation?
Ralph Lauren was one of the first fashion brands to project a live three dimensional fashion show onto the façade of their flagship store on Bond Street, London a few years ago. Viewers and visitors felt an immediate (and positive) disposition with the brand. Soon a permanent ‘feature’ was designed for the same in the London flagship store of Burberry. A similar rationale is now being applied to F&B retail design now, with the introduction of 3D printers. Something as simple as allowing customers to design and print their own pasta will redefine how kitchens will be planned in the near future. It is not just about the food or eating, but the experience that resides in the customer’s mind and how this can be used to recommend and influence the choices of others.
How do you feel technology is influencing operations of F&B outlets?
Static menu panels of backlit transparencies are retail designs of the past. Preemptive LCD menu panels, linked to a smart phone and POS, which suddenly ‘highlight’ certain products as ‘specials’ based on a change in the outdoor temperature or time of the day, allow for brands to have immediate traction to customers. These panels, which have to be tactfully designed into new store formats, change offerings based on consumer moods and purchase patterns, taking ‘customized’ promotions to a completely different level. It is about offering more than rotating digital images of products – it is about evoking an emotion through perceptive technology. Technology is the catalyst to drive sales, when it comes to food and hospitality, it’s is all about sales.
How do you feel technology is influencing the design of F&B outlets?
Retail design is far more than sustainable materials and sleek finishes. It is now about encouraging customer interaction at every touch point and engaging them before they reach the front counter. It is about informing the customer so that they may make an ‘informed’ purchase decision. Retail design – whether it is kitchen size, the layout of the front counter or electronic screens as feature walls, self service ordering and checkout stations, or even electronic hand held satisfaction surveys, will all be dictated by consumer convenience in the future. It is my opinion that consumer convenience will be linked to experience, the foundation of which lies in technological connectivity and adaptability.
Retail trends – e-commerce and the future of shopping centres
The retail industry is at the verge of a fundamental structural change. As shopping centres face the challenge of market saturation and the fast growing threat from e-commerce, industry leaders must embrace change and adapt to the rapidly evolving retail real estate market in order to remain competitive, successful and most importantly, relevant. Shopping centres need to reinvent themselves with new and unique concepts that cater to the needs of new age consumers.
Today’s consumers are quickly adapting to the digital revolution. E-commerce, combined with smartphones and tablet devices, not only offer consumers very competitive prices due to lower operational costs of e-retail, but also provide the largest assortment and quantity of products ever available to them, just a few clicks away, accessible from anywhere.
The impact of e-commerce and m-commerce on traditional bricks & mortar retail is already substantial and continues to grow overwhelmingly quickly every year. If we take the UK as an example, according to the IMRG-Capgemini eRetail Sales Index, internet retailing grew by 14% YoY in 2014 with a record-breaking £104 bn spent online, 37% of which was spent using a mobile device. It is now estimated that e-retail accounts for a staggering 24% of the total retail market in the UK.
As shopping becomes more and more of a leisurely activity and mobile technology fundamentally changes the way that consumers interact with brands and allows consumers to shop while on the move, shopping centres need to embrace new technology as well and incorporate synergic solutions into modernised business models. The trend is similar in the US and quickly spreading to Europe, the Middle East and Asia as well.
The growing importance of leisure pastime, entertainment and edutainment in shopping centres is one of the most promising solutions to the rising threat of e-commerce and market saturation. Shopping centres need to refresh themselves by providing a lifestyle experience. This can be accomplished by reshuffling the tenant mix to increase the non-retail components (new entertainment / edutainment / leisure concepts, F&B, food court, restaurants, coffee shops, bars, and services). The importance of non-retail tenants is evident – it offers a viable solution to competing with e-commerce and proven conversion rates have shown that this leads to higher spending in retail shops. All signs show that non-retail functions, together with the merging of online and offline worlds, will be the backbone of brick and mortar retailing in the future.
The challenge of Retail Marketing Innovation By Francesca Brandolini
Sales Director Americas
Litaa Group
London, UK
Today’s retailers’ marketing objective is to find the right balance between Offline and Online campaigns in order to interact with a digital audience and converge the targeted shoppers into the physical point of sales.
Digital consumers spend 70% of their mobile time searching on the internet, and 50% of this time is spent on the move.
Hence the new challenge for the enterprises in the retail, hospitality and large public venue spaces is to communicate to an active consumer who is constantly distracted by a self-phone or tablet during the shopping experience.
The future of Shopping
Mobile Location Based Services and Marketing has a great potential to allow such enterprises to take advantage of the explosion of mobility, fight back against competitive phenomena such as show-rooming, extract valuable costumer data and gain operational efficiency.
Wifi based Mobile Location Based Services and Marketing solutions is the driver of the market. Many enterprises in the retail, shopping center, and large public venue spaces have enterprise grade Wifi in place and many of the enterprises that do not, will have it in the near future. Many external factors including but not limited to the proliferation of mobile devices, regulatory demands, and abundance of cloud applications are already driving increased enterprise wifi developments. Bluetooth or other lower-energy wireless communications solutions will not become obsolete, but wifi will emerge as prevailing standard for Mobile Location Based Services developments.
Omni-Channel
LIT augmented advertising
LIT enables brands to communicate with consumers with visual and interactive contents via all hands-held wifi connected devices in a given location. It gives the enterprise great competitive advantage against App based services, because the users does not need to download and install and App. Therefore it reaches the whole enterprise audience by overcoming the barrier that requires shoppers to voluntarily download apps.
LIT adds an icon on top of any (non-HTTPS) visited web page during the entire in-venue on-line experience.
The icon is semi-transparent (from 0 to 100%) and scrolls: so all the content of the web page is always accessible.
When the End User clicks on the icon, an online-interactive platform shows up until the user decides to close it again.
The icon is fully customizable. The content of the platform is location-based in order to help the retail enterprise to:
1) Increase revenues by guiding consumption through daily offers/COUPONS
2) Leverage efficiency at running the structures (ex. Indoor navigation, timetables, entertainment, same day delivery, mobile payments, social media etc.)
LIT offers to the enterprises in the retail, shopping center, and large public venue spaces a powerful tool to leverage advertising revenues. It integrates Out Of Home marketing campaigns with Mobile Location Based Services, which means that venue’s advertisers are not only visible in the physical space but also giving the audience the perception of personal exclusivity of their messages.
For a brand executing OOH/mobile LBS marketing campaigns also means being perceived as technology leaders by costumers, which as well leverage their sales and brand recognition.
The service activation is very simple, it is based on a robust, High-Availability of the proxy servers and runs on Cloud Computing environments and also in real DP centers.
It simply needs the End User to log-in to the location Free wifi service.
The log-in provides the End Users with all the information and privacy rules applicable by the enterprise’s solution; user will have full visibility of them, through links.
The service can be activated with preliminary full consent of the end user (an initial landing page and/or specific service agreement and/or opt-in decision by the end user)
LIT works on analytics on the base of numerical data only, it does not interfere with costumers ‘privacy with the collection of sensitive data during the shopping experience.
Brand can assist their target audience during the purchasing cycle, retailers increase in-store revenues and the overall enterprise leverages operational efficiency.
Consumer Acceptance on Mobile Advertising
47% of mobile consumers want retailers to send coupons to their devices when they are in or near the store
53.2M US consumers used mobile coupons in 2014
49% of US smartphone owners have used mobile coupons on their devices
Almost half of smartphone owners would be ‘very willing’ or ‘somewhat willing’ for retailers to send messages to their smartphone, according to recent research in the UK.
33% of UK smartphone users believe that personalized, direct messages sent straight to their smartphone when out shopping would ‘likely’ or ‘very likely’ influence their purchase decisions.
78% of those that would be happy to receive messages would be ‘extremely willing’ or ‘somewhat willing’ for retailers to use this data if it meant more personalized messages for them.
For App users, the top reason that consumers opt into push notifications is for coupons and deals (52%). 46% of consumers say they use push because they like receiving personalized alerts moreover Push messages are opened immediately (only 8% ignore them);
84% of consumers that have signed up for emails from a brand over the past six months report making a purchase based on what they received.
76% of those who actually use location-sharing say it helps them receive more meaningful content, and 73% rate this feature as useful.
Transformative Role of Technology on Retailing By Daniel Latev
Global Head of Retailing Research
Euromonitor International
London, UK
The invention of the cash register more than 130 years ago was transformative for the retail industry in more than one way. Today, retailers are experiencing a similar technology-led transformation. Technology, in broad terms, is the underlying element which links inventory, stores, employees and customers to facilitate a seamless transaction.
\What is special about 2014 is the emergence and adoption of a wide range of technologies both in stores and outside by consumers. This is setting the scene for exciting opportunities for retailers which innovate and invest in technologies which transform their business processes but also challenges for those which fail to invest or adapt.
The internet – key in every aspect
The internet has been transformative not just in the way consumers interact but also in the way a number of industries operate. Retailing has also been affected. The impact of internet retailing is still being mostly felt in developed markets. For example, the internet accounted for 13% of all retail value sales in South Korea in 2013, 10% in the UK and 7% in the US. In contrast, only 2.7% on average for emerging and developing markets retail sales were generated through the internet, although the level and speed at which internet retailing has evolved in developed markets is an indication that a similar transformation is about to happen elsewhere.
What is really telling is that while internet retailing continues to generate the strongest growth rates across most countries researched by Euromonitor International, it is also the channel which generated the largest amount of new sales in 2013 globally, surpassing long-established large channels such as supermarkets and hypermarkets. Internet retailing generated new sales worth US$101 billion in 2013 compared to US$85 billion for supermarkets and US$74 billion for hypermarkets.
The rapid growth of internet retailing is forcing retailers to adapt quickly in order to pick up sales and meet consumer demand. However, launching an online shopping site is no longer sufficient for successful operations as consumers today are demanding more flexibility than ever before from retailers. This is where integration between store-based and online operations becomes crucial.
Multi-channel retail is not a new concept. What is new is that retailers which are successful at implementing a multi-channel strategy are those which have adopted a channel agnostic approach, ie do not view the different channels as competitive but rather as complementary to one another. The consumer purchase journey could start from a catalogue, then the consumer may view and try on a number of products in-store, order them online through their mobiles and later return the products via a different branch. This is known as omni-channel retailing.
To facilitate this omni-channel shopping experience, retailers are investing in technology which can better manage their inventory and shipping.
In the next two parts of this series we will examine how product fulfillment and payment systems have developed, the impact of smartphones on stores and how new tech such as iBeacon will shape stores in future.
In the first part of this series we looked into how internet retailing is transforming retailers of all sizes and shapes. In this part we will examine how this transformation is reflected in product delivery and fulfillment and the proliferation of payment systems.
Delivery options galore
Convenience and timeliness remain key, and this is also true for delivery options. As home delivery can have its drawbacks, such as the customer not being at home when a parcel arrives, retailers are looking for new ways to get their products to consumers.
The store as a centre for all sales has been reinforced with new delivery options such as click and collect for products which can be ordered online and are not available in a particular store location, this being an option which works well for smaller stores with a limited product range. This option works best for retailers which have a wide store network. This concept has given rise to third-party services which enlist convenience stores, forecourt retailers or independent stores which act as collection points and even offer returns. One example is “Collect +” in the UK.
Other retailers have taken this further with delivery lockers. The lockers can be installed in stores, shopping malls, underground stations or other public locations where the retailer can deliver the products for collection at a convenient time. Amazon was one of the first retailers to implement this new technology. Independent services such as BufferBox are also being developed.
Same day delivery is also proving to be popular with consumers as long as it is offered at the right price. Still very much in the experimental stage, retailers are working with delivery companies to offer specific delivery times, and in some cases even same day delivery. Currently, this option remains limited to big cities and is offered by large online retailers such as Amazon and eBay. Retailers are already developing this model to allow for deliveries in-store, often free of charge.
Automated delivery – or delivery drones – is still very much in the concept phase, although both Amazon and DHL are testing the technology, which offers accurate, timely and quick delivery. Thetechnology which uses small unmanned drones to deliver small packages directly to consumers’ homes promises, when fully functional, to deliver within 30 minutes of receiving an order. This service could offer the ultimate in terms of same day delivery, which would greatly reduce waiting time and increase convenience for consumers, thus capturing more elusive impulse purchases.
Is one payment option enough?
Payment technologies have proliferated in the last few years and we expect that there will be even further development with new technologies gaining prominence.
Self-service checkouts have been a relatively established option now for a number of years, particularly in grocery retailers. For retailers with high footfall and a large number of transactions, these offer a way to cut queues at peak hours without increasing headcount greatly as usually one employee can manage 4-6 self-service checkouts. At the same time, consumers are given the opportunity to self-scan and pay directly for the products they have purchased. One drawback of this technology is that it can incur high hardware costs.
The concept of self-service checkouts is starting to move away from just grocery stores to other outlets. One interesting implementation of this concept has been noted in Apple’s retail stores, which allow consumers to purchase lower value products directly via the EasyPay app on their mobile phones. The app enables consumers to scan a product’s barcode and collect payment, thus reducing waiting times, particularly during busy periods of the year. In terms of security, the RFID of the product can be easily disabled by the security software so when the consumer walks away they do not trigger the alarm.
Similarly, on-the-go payment technologies are gaining prominence. We are seeing more stores offering mobile POS terminals to be able to take payment via tablets and smartphones. This is leading to an increase in the number of sales assistants who can take payments on the shop floor directly and thus cut waiting times for consumers, especially during busy shopping times around the holidays and at weekends, without the need to refit the store with cash registers. Further to simple payment terminals, the use of tablets in stores has been a way to capture sales which otherwise might not have been possible. For example, when a customer is searching for a product which is not in stock, a sales assistant can directly order the product online for later delivery in-store or at home.
Other innovations in the payment space still under development include how stores accept an actual payment and if there is anything to replace the credit card, the venerated payment veteran. Most development in this space has been seen in mobile payments. NFC or near field communication has seen some steady development but relatively slow adoption among retailers. The premise behind NFC payments is that consumers can simply tap their card or phone on the terminal without the need to swipe it for the payment to be processed, offering an overall speedier shopping experience. A number of cards now offer combined mode of regular payment (through a swipe) and with a NFC for lower value transactions.
However, the expected wider adoption of NFC payment integrated in mobile devices has not materialised due to security fears among consumers and low participation from retailers.
A new payment system has been developed by Square (a couple of other payment systems have also employed a similar approach). Square is a portable swipe card reader that can be plugged into smartphones and tablets running on Apple iOS or Android to take payments via credit card. The system is suitable for small merchants but also larger ones which need a mobile payment solution. In addition to accepting card payments, the system can run loyalty schemes, offer better tracking and analytics and cashless payments as well.
In the first two parts of this series we looked into the transformative role of e-commerce on retailers and how this is impacting in product delivery and payment systems. In this section we will examine the role of smartphones and the exciting new technologies on the horizon.
Mobile phones in stores can be used beyond showrooming
Smartphones have seen rapid consumer adoption. This device, which allows access to the Internet anywhere and at any time and can run a variety of applications with different functions, has empowered consumers and is changing the way they shop.
One of the first effects of smartphones has been so-called showrooming, ie when consumers browse products in stores only to purchase them at a cheaper price online. This behaviour has subsided as stores have reacted and adapted by offering competitive prices in-store, as well as exclusive products and additional services.
The latest data from Euromonitor International shows the emergence of a positive trend in the use of mobile phones. In countries where PC ownership is still relatively low, smartphones and tablets have emerged as the primary way of accessing the internet and have led to significant growth in online sales. The penetration of mobile internet retailing fluctuates from a high of 55% in Nigeria and 35% in Japan to less than 1% in Egypt and Algeria. Mexico is in the higher range with 14% in 2013, increasing rapidly from 6% two years ago.
As consumers increasingly use their phones to shop, retailers are finding better ways to help them. One of the best examples is shopping on the go while out and about either through an app or virtual shopping shelves. These shopping shelves are gaining adoption globally and straddle the line between advertising and commerce, allowing consumers to shop by scanning the products on printed posters placed in high traffic locations such as metro or rail stations. The concept was first tested in South Korea by Tesco, and has seen adoption by Peapod in the US and Pão de Açúcar in Brazil.
Another new technology which retailers are testing for delivery through smartphones is augmented reality which can provide additional information to consumers. Augmented reality on a smartphone combines the real view of a scene or an object as viewed through the phone camera, with additionally superimposed elements which are artificially generated. This technology has been used to provide additional product information and to aid purchase. One of the best uses of augmented reality so far has been by the Swedish retailer IKEA, which enables users to see how furniture from the company’s catalogue would look in their own rooms.
What to expect in the future?
Mobile payments can be rightfully expected to gain an even wider share when a prominent player such as Apple throws its weight behind the concept. It has long been expected that the company would release its own payment solution or wallet. The company has already taken the first steps with the introduction of Passbook, which is used to store tickets or coupons. The launch of the iPhone 5S with Touch ID technology has brought this possibility a step closer. Touch ID is a fingerprint sensor embedded in the phone which acts as a pass code. Currently, consumers can pay for digital purchases through the iTunes or App stores by authenticating their account through the fingerprint scanner. It is expected that Apple will extend this technology in the future to other retailers. The impact could be significant as already the company has one of the largest number of accounts with associated payment details. This could make payment for digital and physical products even more seamless.
iBeacon is another relatively new technology which offers significant potential for retailers to use in stores. iBeacon is an indoor positioning system which uses low powered Bluetooth to relay information to mobile phones. The technology offers a number of opportunities in proximity marketing in-store. The technology can be used to generate location specific messages within specific areas of a store, such as coupons, or product specific promotion or additional information.
The technology is being rolled out across stores now, for example in Apple and Safeway outlets. It is expected that in time it will be linked to mobile payment wallets and will offer greater information on consumer behaviour in-store so as to be finally able to link smartphone use in store with purchases.
Security is expected to be a huge area of concern for consumers and retailers alike. This issue has come to the forefront of the industry following the massive security breach reported by Target, the US mass merchandiser. More than 40 million credit and debit card details were compromised, which has significantly impacted the retailer’s reputation. Subsequently, other retailers such as Neiman Marcus have reported smaller breaches in security which may have compromised payment details. This will have a major impact on the industry moving forward in a search for a more secure system.
Already we are seeing that the stores which did better during 2013 were those with better developed online divisions and much tighter integration of store-based and online operations through the good use of technology. Thus, in the next few years we can expect to see retailers engaging in a race to cater for increasingly digital-savvy consumers. Those which invest in correct technologies and integrate them into their stores will be the winners of the future.
Current & future retail trends By Andy Stalman
Managing Director
Cato Partners Europe
Madrid, Spain
Overall all current and future trends are structured by a common denominator: The Digital.
Digital is the true “game changer”. I mean the Internet and new technologies. This does not mean giving up the analog, but integrating the new with the old. The way I call this phenomenon is Brandoffon. Brand (Brand) in the offline space (Off) and online (On) working integrative, complementary and on a total feedback manner.
Data, data, data. The Data is only useful if the information obtained is applied intelligently. This data will allow customization being a reality and the continuous and constant improvement a must. Technology, at the end is neither good nor bad, but what we do with it. Focus on building and offer the best experience possible from the information.
People remember a third of what they read, half of what they hear but 100% of what they feel. The more memorable the experience, the better.
That innovation does not carried forward the most important thing in retail: People. In an increasingly automated world, people should be located in the heart of the technology. Humanize the treatment, the care, the interaction, selling is the capital, and will be very profitable.
Also, Internalize, store employees are no longer brand ambassadors, they are the brand.
More channels, more work, but also more opportunities. Millennials want to buy online, in the United States men consume nearly double that women online (32% men vs 18% women). What retailers should consider is the strategy of the 5 C’s of Omni-channeling:
Coherency
Consistency
Constancy
Building Trust
Sharing Quality content
A strong brand identity can add new channels without the Branding being affected, but the opposite.
Most brands want to open a Facebook profile and still not knowing how to answer the phone. Those who do know give value to brand building from the details have realized that the opportunities provided by the online world must evolve from “like” to “buy”. That is, investment in Internet tangibilizar. That return is measurable and tangible.
When the Internet was just beginning to be available to people, online sales of fashion products in the US, say in 1994, was one million dollars. In 2014, more than 90 billion and the estimated total online sales for 2015 exceeds 3 trillion.
We are already seeing how eCommerce is getting stronger. By 2020 80% of adults will have a smartphone with Internet access.
It goes much slower than other innovations. Especially in countries where no regulations or laws that have not been updated; and where people are still wary of this. But it’s a two-way, inevitably and eventually be consolidated and all have our wallet mobile.
People do not want to buy products, consumers want experiences. They want to be part of the stories. Even create their own stories.
Undoubtedly the future of shopping is personal. Customization taken to the extreme. As Jeff Bezos says, each person will have their own particular store.
Stores will be reinvented and will become:
Flagships brands. Essential marketing tools.
Experiential spaces of brands.
Logistic points, for delivery and collection.
As you make your customers feel is your brand.
Consumer Location-Based Analytics Deliver Actionable Insights By Martin P. Block
Professor
Medill School, Integrated Marketing Communications and Executive Director, Consumer Analytics Institute
Northwestern University
Chicago, IL USA
and
Steven Keith Platt
Director and Research Fellow
Platt Retail Institute and Research Director, Consumer Analytics Institute, Northwestern University
Chicago, IL USA
Advances in in-store, location-based technology are empowering retailers with cutting edge insights about consumer behavior in their stores.1 A major benefit associated with these new technology platforms is that they can be inexpensive to deploy, particularly when compared with more traditional measurement instruments such as traffic- counting devices and video observations. Now, system wide deployment is financially possible.
In general, this technology enables a retailer to accumulate information on the following:
Date, time, and number of customers detected in a store.
Store traffic patterns.
In-store location dwell time.
Store penetration rates.
Repeat visits.
This information provides a retailer with various types of actionable, real-time information that enables rapid response. Additional store performance metrics are generated when this information is integrated with other data, such as that from Point of Sale (POS) and human resource management systems.
In this article we discuss how this technology enables retailers to learn more about consumer behavior in-store and use that information to improve operating performance. We also present two scenarios: one from a hypothetical department store chain that addresses various related questions; and another that demonstrates the benefits gained by using this technology on a university campus.
Store Traffic
Data related to the date, time, and number of customers detected in a store can be useful for various purposes. Here we address the use of traffic information to improve store performance and gain insights into the impact of marketing and promotional activity.
Traffic data is a key store performance measure because store revenue and merchandise management information (such as inventory turnover and gross margin) might not be revealing the entire picture. Consider this example. Two comparable stores are located in the same town. Top- and bottom-line numbers are the same, so one may draw the conclusion that the stores have comparable performance characteristics. However, one of the stores has 12 percent more traffic. The inability of this store to convert traffic into sales points to various performance shortcomings. These may include, among other things, poor staff training, inconsistent merchandising and/or out-of-stock positions, a failure to properly institute promotional programs, or extended wait-times at checkout that are causing customer abandonment, etc.
Traffic information is also useful for understanding marketing and promotional campaign effectiveness. For example, an indicator of local mass media campaign success may be tied to its ability to drive traffic into the store. This traffic increase, if any, can further be evaluated to determine campaign cost efficiency. That is, what is the return realized from an investment in mass media advertising by increased store traffic, which creates a sales opportunity?
Store Traffic Patterns
The study of in-store traffic patterns can help a retailer understand and improve many operational aspects of its business. These include the following:
Optimizing store and fixture layout.
Improving merchandise placement.
Programming in-store marketing activities based on traffic flow and speed (i.e., tracking consumer movement along a path can provide an opportunity to engage with them at coordinated locations where the customer and merchandise intersect).
Positioning staff to improve customer service. For example, by knowing the flow of customers from certain areas of the store to the checkout area, managers can increase staffing at the checkout before wait-times build.
Directing customers from crowded to uncrowded assets can increase asset utilization and customer satisfaction. For example, a department store has several restaurants in its building and one has a wait line while the other does not. Redirecting customers to the less-crowded restaurant can increase utilization, as well as increase customer satisfaction.
Here we explore how store traffic patterns can be studied to measure the effect of messages delivered by digital signs on consumer behavior.
Consumer behavior is generally defined as the decisions and associated activities of individuals related to buying and using goods and services. It encompasses both the mental decisions and the physical actions that result from those decisions. While primary research focused on gaining insights into both components of consumer behavior can be undertaken, an understanding of consumers’ physical actions is a strong indicator of how those decisions are manifested. This is particularly true when a consumer’s physical actions are measured in response to a stimulus, such as messages communicated on digital signs, static signs, and those delivered to a handheld device, such as a smartphone.
When considering the investment required to create effective messages for digital signs, it is helpful to understand if those messages are producing the desired result. For instance, is a message delivered in one part of the store moving traffic to another part of the store as desired? Is a message displayed helpful in upselling, affecting dwell time, or reducing perceived wait time? By tracking traffic patterns, insights into message impact can be obtained that answer these types of questions.
In-Store Location Dwell Time
Understanding customer dwell time in a store and in-store, location-specific dwell time can provide a wealth of insights. The study of store visit duration is useful because increased visit length has been found, in certain instances, to lead to increased purchases, as well as serve as an indicator of customer loyalty.
Tracking the duration of customer store visits can help a retailer understand its progress in attracting and keeping customers engaged. Introducing revenue measures into the equation can provide insights into spending levels during each visit, and how various promotional and marketing activities are affecting sales based on time spent in the store. In addition, store dwell time, when combined with repeat visit information, can provide consumer loyalty insights.
Research into consumer in-store, location-specific dwell time can also be valuable. Changes in zone-specific dwell time, as well as whether customers are moving to targeted zones because of the effect of messages delivered to a customer’s mobile device, for example, can be measured. The length of a zone-specific message also can be optimized based on understanding dwell times. Finally, product placement and assortment can also be improved based on zone dwell time measurement.
Store Penetration Rates
A store’s penetration rate refers to the number of customers that walk past a store versus entering the store. While not useful in all instances, measurement of this in a mall environment, for example, can yield interesting insights. As an illustration, it is possible to study whether messaging (static or digital) or product merchandising visible at the front of the store are successful in drawing customers into the store. In addition, the significance of various promotions can be analyzed by traffic draw. Finally, this measure can also be helpful in understanding whether various other marketing and media campaigns are driving traffic into the store.
Repeat Visits
Tracking customer repeat visits is useful for understanding, among other things, if out-of-store marketing activities, such as a direct mail campaign, are successful in drawing customers back to the store. Moreover, it is possible to estimate product and service purchase cycles and how they are influenced by various marketing activities. Further, measuring repeat customer visits can lead to new insights into loyalty programs with a retailer’s best customers, as well as tracking new visitors.
The five core consumer location-based analytics discussed above, when combined with other data, can provide additional store performance feedback. We discuss here those that result from combining traffic with POS and human resource management system information.
Sales Conversion and Productivity
Sales conversion refers to the percentage of shoppers that enter a store and make a purchase. Stated another way, it considers the available pool of customers in a store and how many of them make a purchase. It is calculated as the total number of transactions divided by traffic. To illustrate, consider the following example:
A store completes 25 transactions in an hour during which 50 customers visited. This results in a 50 percent conversion rate (25÷50). Assume that the same store then changes the messages on its digital screens and/or promotions delivered to smart devices. Subsequently, the store completes 35 transaction in an hour during which 50 customers visited. This results in a 70 percent conversion rate (35÷50). One could therefore conclude, all else being equal, that those messages and/or promotions are having a positive effect on customer behavior.
Sales productivity, on the other hand, is an indicator of the average amount spent by each shopper. It is calculated as store sales divided by traffic. For example, if a store sells $100 worth of merchandise to 25 customers, the average spend is $4 per customer (100÷25). Later, the store manager decides to increase store sales staff, which results in sales of $200 to 25 customers, increasing the average spend to $8 per customer (200÷25). This demonstrates that the cost of increasing staff in this instance may be justified.
Factors such as in-store marketing, pricing, merchandising, and staff skill level, among other things, can impact sales conversion and productivity. Depending on the retailer’s investigative requirements, these and other factors can be isolated for further study.
Staff Availability
Staff availability is a measure of available labor to serve each shopper. It is calculated as store labor hours divided by traffic, and can be measured for both a store and/or a specific zone. This aids a retailer in achieving operational efficiencies by matching staffing to desired customer service levels based on traffic. For example, if 100 customers visit a store in an hour when there are 50 available labor hours, the result would be a 50 percent customer service coverage ratio (50÷100). If the labor hours available are reduced to 40, the result is a 40 percent customer service coverage ratio, meaning that less labor is available to serve customers (40÷100). When the impact on sales and labor costs are then considered, ideal staffing levels can be achieved.
Traffic data can also aid in staff scheduling and impact in the following ways:
Schedule more personnel to work at high traffic times.
Schedule employee breaks at low traffic periods.
Schedule merchandise deliveries and restocks at low traffic periods.
Assign the “most qualified” associates to peak traffic periods.
Evaluate employee performance based on sales conversion.
Measure the impact of training on sales conversion.
In the following section of this article, we focus on the use of Wi-Fi technology in two situations. In the first, we answer some questions related to consumer location-based analytics in a theoretical department store scenario. In the second, we detail some of the benefits that may be realized by operating this technology at a theoretical university.
Department Store
Maddy’s operates more than 800 department stores in the U.S. As part of its omni-channel program, it has made Wi-Fi available to customers in its stores. Having already made this investment in Wi-Fi, the firm’s store technology manager is exploring whether to introduce Wi-Fi consumer location-based analytics. In this regard, he has advanced the following questions:
How expensive will it be to add this to my existing Wi-Fi infrastructure?
This will depend on the level of accuracy desired. If the original wireless deployment was designed with optimized location-based analytics in mind, or if optimal location accuracy is unnecessary, the expense is fairly minimal. All that is required is licensing the software necessary to gather signal strength information, calculate location, and analyze the data. This software typically involves a centralized component and a per access point component from a pricing perspective. If Maddy’s is looking for optimal location-based analytic data and did not design the original wireless deployment with this in mind, they will likely need to add and reposition access points, as most wireless networks are not designed to yield optimal triangulation. For the highest accuracy, Maddy’s may need a different class of access point devices, along with specialized location modules.
Other than the potential need for additional or a better class of access point devices and specialized location modules as noted above, what is required to operate this, in terms of hardware and software?
From a hardware perspective, Maddy’s will need to make some computer capacity available to run the location and analytics software. The amount is determined by scale and use case requirements. In terms of software, the primary component is the software that collects data from the wireless network, calculates location, and performs the analytics.
How long will it take to get this technology operational?
If the required hardware is in place, this can be accomplished fairly quickly.
As well as the five core location-based analytics offered, I want sales conversion, sales productivity, and labor staffing insights. How do I tie this into our existing POS and labor databases?
This is achieved by means of open APIs. Data can generally be either pushed or pulled for integration.
We need other customized analytics. How do we create and manage this?
In general, analytic models can be created in statistical processing software, which then pushes out the results to a custom UI. Data can reside behind the company’s firewall for processing locally or can be pushed out for external processing.
Finally, with this increased knowledge, how do we make this information actionable within the organization?
This will be retailer specific, but this generally can be performed in various ways. One retailer has determined to create a specific position within its organization that is responsible for reviewing activity and creating reports, alerts, etc. Rules-based programing, which generates messages to a specific department and/or individual based on certain activities, can also be created. As well, specific management dashboards can be created.
University
West New York University sits on 1,400 acres, has more than 400 campus buildings, and a student population that exceeds 29,000. The University’s Manager of Information Systems Operations is considering adding student location-based analytical services to the school’s Wi-Fi infrastructure. The potential benefits associated with operating this technology on campus include, among other things, the following:
In a campus emergency, messages are delivered by means of Web, audio signal, phone calls, text messages, digital signs, and TV and radio communications. Rather than have broad distribution of these messages to areas that may not be impacted or are affected differently, specific instructions can be delivered to devices in the location of an emergency, while students on other parts of the campus receive different messages.
The University has five major dining facilities. Throughout the day, utilization rates at each fluctuate widely. For example, dining room one may be at more than 100 percent capacity at lunchtime, while dining room two may be at 60 percent. Advising students in the area of dining room one that there is a 20-minute wait time, while nearby dining room two has no wait time, can both increase utilization at restaurant two and student satisfaction.
The football stadium at WNYU holds over 60,000 people. This technology enables the delivery of specific messages to those attending events in the stadium.
On-campus parking is limited at WNYU. Messages about available parking can be delivered to a device based on its location.
Campus safety is of prime importance at WNYU. Students who download the University’s app or on-board the network are provided with accurate directions that will easily guide them to their destinations at different times of the day. For example, if the shortest path to a student’s destination is considered less safe at nighttime, students can be guided to take a safer path.
Students and guests, as they travel the campus, can receive welcome messages, general school information, and information related to their surroundings, such as a specific building’s or department’s history. In addition, information on exhibits in the University’s museum, and promotional deals while shopping in the university store, for example, can be targeted based on location.
Pedestrian traffic and crowd control can be monitored and safety and related corrective action taken early.
Conclusion
This article discusses the wealth of real-time insights generated from consumer location-based analytics. We address both the data created and how it can be used to improve store operating performance. In addition to the insights discussed here, there are many others that can be implemented by a retailer, depending on its specific testing needs. Technology customization and setup, such as integrating rule-based notices in response to defined factors, will also be retailer-specific. Finally, we presented two hypothetical examples to provide additional insights.
Current & future retail & shopping center trends By Andrew Strenk, Ph.D.
Managing Director
Strategic Planning Concepts International LLC
Tustin, CA USA
The world of retail is changing very rapidly and that we expect more changes in the next five years than we saw in the last fifty, we are not sure about other trends. Some trends will have “legs” and survive and some will prove to be fads. Others just sort of fade. Various and sundry retail formats have had their moments of popularity (power centers, entertainment centers, festival marketplaces, lifestyle centers, town centers, etc., now we have box parks, niche centers and concept centers….but through the trial and error process, the industry has learned that certain formats work really well under certain conditions and not so well under other conditions. None of these formats are a “universal cure” for a particular site in a particular market.
Lifestyle shopping centers seem to be a fad in much of Latin America now, but most of these projects are lifestyle centers only in their name and the imagination of their developer and/or owner. Technically lifestyle centers can represent any lifestyle so that a Walmart center is in fact representative of a certain lifestyle (speed and convenience and discount prices)…but the classic definition of is of an open-air, modestly sized, pedestrian-oriented project with very strong representation by the fast fashion sector and the food and beverage (F&B) sector. The implication was always that there was some sense of intimacy and “fun” ambiance. It is difficult for a super regional project or a mega mall to meet these customer aspirations, because the sheer size and the distances involved in traversing the project tend to defeat the customers’ enthusiasm for a fun experience. In general, lifestyle centers also do not have a unitary design but flourish with a lot of visual variety. Originally they were the “anti-mall,” not just a smaller version of the same thing. We expect, having said this, to see both more, and better quality, lifestyle centers in Latin America.
Mixed use projects are also somewhat of a a fad now in much of Latin America. However, mixed-use is not well suited for every site and every market and a thorough assessment of the site and the market are necessary before embarking on what is a complicated, complex, often frustrating and time-consuming development format. It might seem simple, when viewed from a distance, to simply stack different uses on top of each other and put them all on top of a retail podium of some type. However, most mixed-use projects fail to meet their objectives. They are difficult to design. They are difficult to finance. They are difficult to build. They are difficult to operate. There is virtually no part of the process that is simple. Each additional real estate use multiplies the complications. In particular, access, circulation, deliveries, drop off zones, egress, ingress, parking, trash pick up and vertical transportation areas where many projects run into serious challenges. Too often, the developer is forced by financial demands of investors to add density or additional uses that a market can not support. The land price is irrelevant to these discussions….if there is no, or only a limited market, that is the market. A developer can not grow wallets and purses to infinity in order to meet the needs of spreadsheets. Again, we expected to see new mixed-use projects, but they will be more sophisticated and better quality, as developers learn from the experiences of their first wave of projects.
Regional fashion malls remain a favorite across much of Latin America. They are big. They are glamorous. They bring the developer a lot of attention from his (or her) peer group. However, we do not expect many of these to be built, going forward, because they are expensive to develop and the whole chemistry between department stores and mall stores has been upended.
We expect new forms of entertainment, as technology brings us new inventions and many shopping centers seek new ways of attracting more customers. This includes bigger multiplexes with more technology, more food and beverage options and more creative mixing of food and beverage options.
It seems that pop up stores may be here to stay and that we will see more and more of them, because they make economic sense, they are a great way to test out new product and they provide visual variety for shopping centers in addition to providing “something new.” They are a sort of “lab” for experimentation and they do not cost that much to do. We see this trend expanding.
It seems that we will be seeing more temporary stores (similar to popups but in conventional in-line spaces). Likewise, they provide a sense of newness and change, while filling dead space….but we see this trend as more of a pre-determined leasing strategy than as a “last resort”. Typically in the past, temporary stores often were a kind of emergency response to either a sudden vacancy. Or they were fixed to Halloween, Christmas or some holiday or celebration. We see a broadening of the type and focus of these stores. This also looks to be a trend that will endure.
Pop up stores and temporary stores are driving a trend to more curated leasing, shorter lease terms and changes in the way that leasing is done. Is this a change that will become widespread? If so, it will radically change the industry…what is the value of a shopping center where all of the leases are short term (as at the Bikini Berlin project)? Speaking of trends…the box park (reused and repurposed containers) might be a trend….at least in certain environments. It represents a low cost, fast and relatively efficient way to develop a shopping center and could be applicable as a way of putting land to use while waiting for financing, entitlements and permits and final design drawings.
Anchor department stores appear to be continuing to lose ground. More and more, it is possible to design and develop shopping centers that do not need this classical store format. It is very difficult for most department stores to compete with the fast fashion leaders in terms of assortment, selection, price or speed to market. Most department stores surrendered any effort as personal service a long time ago. So what is their advantage? Their efforts to improve their supply chain logistics are impressive but they in general are still chasing the progress curve, not leading it, as the fast fashion specialty stores are. What is the department store “value.”? Ever easier credit terms? If a department store wants to become a bank, that is certainly allowed, and there is a niche for this activity….but then a department store chain should not be confused as to what its priorities are or what the value is that it is delivering to the marketplace. Otherwise, that department store will fall off the endangered species list to the extinct list. The energy devoted to structuring financial vehicles to provide credit are great, but the visually merchandising efforts of most department stores has taken a very subordinate role and left department stores looking relatively pathetic in contrast to their more nimble and innovative competitors.
There are more trends, in the area of design….like double and triple height storefronts (the fast fashion leaders are leading the change). This requirement will force the redesign of many shopping centers and a lot of creativity and innovation will be required to eliminate the existing bulkheads. New materials, new textures, new finishes, new devices….all are going to impact design. Those projects that are designed in advance to be able to change and to be flexible will gain an advantage.
Trends are there in every sector of the industry…..the application of analytics to decision making is moving rapidly. There are now apps that can apply hundreds of factors to the analysis of a market or a site. This is leading to a greater understanding of a site and its market, and to some degree, of consumer behavior. However, changes in consumer behavior remain difficult to predict in advance because such changes often revolve around items that have not yet been invented.
Our view is that the retail industry has always been about change. Only now, the pace is speeding up!
New technologies in retail: Just beginning.
POS evolution. The shopping experience of tomorrow will not be like today, we expect the totally automated checkout to continue to spread and for POS equipment to become increasing sophisticated, complex and efficient, as well as less costly…. essentially following the trajectory of the computer. Consumers will also become more comfortable with using these POS interfaces….as they have adopted the use of ATMs, cell phones, smart phones, tablets and other devices.
Wearables. The science is there today, the logic is there, the pricing needs to become more affordable. Current wearables are rather primitive compared to the next generation of items.
iBeacons. Already in use and spreading rather rapidly, we need to think about what Beacons 2.0 or 3.0 will be doing.
Augmented reality. If not already there, coming to a neighborhood near you, sooner or later. This has a lot of implications in many areas…..customer experience, store design, visual merchandising, directory assistance, concierge services…..
Others. Long list…facial recognition software, for example, already in use in some stores. Body scanning software.
The challenge of retail innovation. Innovation and creativity are in demand, but in relatively short supply.
Omnichannel. Omnichannel will be hugely more important than is currently the case, and will spread globally to saturate every market. Those retailers that do not move to a omnichannel platform will not be around much longer. And those that do not do it well will also struggle. Its great for the consumer, it gives them more choices, more flexibility and more convenience. What’s not to like about it? If you are only an e-tailer or only bricks and mortar, you will suffer. As supply chain logistics and infrastructure continue to spread and improve, omnichannel becomes more and more of an option for more and more customers.
E-commerce. Fast. Easy. Convenient. Getting more comfortable. Won’t go away, but will not replace shopping and certainly won’t replace eating and drinking. However, this will be a part of the rapidly spreading omnichannel universe, but it won’t be the entire sector of omnichannel retailing. Bricks and mortar stores are not going away, they are just changing and they are becoming more interesting places to visit.
Mobile payments. Should continue to expand as security systems improve and the technology eliminates the current glitches.
The future of shopping. Shopping has been around for thousands of years, it is not going away, just changing. The venues will look different. The tenants will be different. The consumer has more choices, more formats, more experiences than every before….what’s not to like as a consumer? As for shopping center owners (and investors), there are only two types…..the quick and the dead. Those owners who can innovate, create, renovate, change or improve will prosper. Those who can’t, won’t. Its like the bestselling book “Who Moved My Cheese?” You can go out and find new cheese or sit and wait for the old cheese to reappear again.
Trends in neuromarketing applied to retail by Raul Garcia Serapio
Partner-Director
Active Intelligent Marketing S.L. (MAI)
Madrid, Spain
In our knowledge retail is in a phase of uncertainty, many changes in a short period of time, much technological indigestion and sometimes the focus of our business which is people and the sale. There is a great technological embarrassment that has overwhelmed the retailer.
At consumer level, the trend is that privacy is going to be a rising we must consider.
Ibeacons, wereables and other technologies that allow us to perform proximity marketing should have a well-defined strategy and do not overwhelm our client, we are becoming less patient about this.
One of the major challenges of the retail is knowing the customer and potential customer, know what happens and what not happens in the store. Technology is a complement to our entire strategy and we should use it more transparent to the life of our client.
Omni channel is the nirvana of all retail, Omnichannel is the ability to communicate, influence and engage our client without any kind of break between different channels within an environment in which our consumers are demanding an answer.
And this is very difficult for a retailer, especially because most have not grown technologically savvy.
Regarding ecommerce, we have left a lot to see and discover and the clear trend is that Pure digital players are betting very strong and also are turning to off. I also like to note that the percentage of sales in retail is still relatively low compared to the total in most sectors, this is a fact.
Regarding mobile payment we are at an interesting juncture where large digital face major means of payment, and all turn face new forms of digital payment that are taking its market share. This now makes for a confusing situation for the user, the banks have much to say on this.
The future is not differentiate on the off in countries where technologies are in the majority of the population.
Get information passively, without overwhelming the consumer. These data make them experiences inside and outside the point of sale, and those experiences make them turn in information centers.
Fonte:http://inmobiliare.com/la-tienda-y-el-centro-comercial-del-futuro/
L’idea di creare un blog giornaliero per il mondo del retail nasce grazie ai continui feedback positivi che riceviamo dalle notizie condivise attraverso diversi canali.
Rivolto a tutte le tipologie di distribuzione presenti sul mercato: dal dettaglio ai grandi mall, dal commercio locale e nazionale alle catene di negozi internazionali, investitori, ai nostri fedeli clienti e chiunque altro è realmente interessato allo studio e all'approfondimento su ciò che guida il comportamento dei consumatori. E' anche un blog per tutti coloro i quali lavorano già nel mondo del Retail.
Verranno condivise le loro esperienze, le loro attitudini e le loro experties. Un blog di condivisione, quindi.
Ospitato sul sito della BRD Consulting, che da decenni lavora nel mondo distributivo Italiano ed Internazionale, il blog Store in & out riguarderà il business, i marchi e i comportamenti d'acquisto propri di alcune delle più grandi aziende.
Ci saranno anche notizie in lingua originale per dare evidenza dell’attenzione della nostra Azienda nei confronti del global.
È possibile raggiungere lo staff a: info@brdconsulting.it
